2. About IFPRI
The International Food Policy Research Institute (IFPRI®) was established in 1975 to identify and ana-
lyze alternative national and international strategies and policies for meeting food needs of the developing
world on a sustainable basis, with particular emphasis on low-income countries and on the poorer groups
in those countries. While the research effort is geared to the precise objective of contributing to the reduc-
tion of hunger and malnutrition, the factors involved are many and wide-ranging, requiring analysis of
underlying processes and extending beyond a narrowly defined food sector. The Institute’s research pro-
gram reflects worldwide collaboration with governments and private and public institutions interested in
increasing food production and improving the equity of its distribution. Research results are disseminated
to policymakers, opinion formers, administrators, policy analysts, researchers, and others concerned with
national and international food and agricultural policy.
IFPRI is a member of the CGIAR Consortium.
8. Preface
Since 2007, two rounds of food price hikes have contributed to millions of people being hungry or mal-
nourished. The same factors that contributed to the 2007–08 food price crisis triggered similar price
spikes in 2011—factors including a declining growth rate of agricultural productivity, high energy prices
leading to expanded biofuel production, depreciation of the US dollar, strong demand from emerging
economies for agricultural products, and weather shocks. With such complex forces at work, it is clear that
the food policies necessary to ensure that all people have access to safe, sufficient, nutritious, and sustain-
ably grown food must go beyond traditional agricultural production. Fittingly, demand for evidence-based
research to inform those policies is higher than ever, and the International Food Policy Research Institute
(IFPRI) produces global public goods to respond to that need.
IFPRI’s 2011 Global Food Policy Report—the first in a new annual series—provides an in-depth, con-
textualized look at the past year’s major food policy developments and events. It both raises and answers
these key questions: What happened in food policy in 2011 and why? What challenges and opportunities
resulted? What could have been done differently? What should be done in the future?
In 2011, agriculture moved to the forefront of the international development agenda. In addition to pro-
ducing adequate food, agriculture’s crucial role in improving nutrition and health, sustainably making use
of land and other natural resources, and helping to address global threats like climate change has received
long-overdue recognition. Investments in the sector are rising, and contributions are coming from indus-
trialized countries as well as emerging and developing economies, the private sector, and philanthropic
entities. In addition to higher investments, policymakers also scaled up collaboration across borders, in
particular in their efforts to control food price volatility through the provision of better market informa-
tion. This type of global policymaking must continue to take into account that legislation in one country
(particularly trade and environmental policies regarding biofuels) can harm food security in others. Inter-
national agenda-setting meetings, like the Rio+20 United Nations Conference on Sustainable Develop-
ment in June 2012, cannot neglect the concerns of the poor. As the humanitarian crisis in the Horn of
Africa starkly reminds us, however, research agendas and information-sharing are not enough to avert or
solve a problem; preventive actions are also needed.
The topics covered in the 2011 Global Food Policy Report were selected after numerous consultations by
a strategic advisory council consisting of policymakers, researchers, and other experts that sought to rep-
resent the most profound, relevant, and broadly applicable food policy issues that arose in 2011. IFPRI’s
Board of Trustees and senior staff then provided feedback on major development and research topics, and
a review of related print and broadcast media from 2011 was conducted. Finally, leading policymakers
and food experts from around the world were asked for their opinions on how to best capture national and
regional perspectives.
Contributions were commissioned from experts, scholars, and stakeholders on topics that represent
either a new development in food policy, a major change in food policy, or a new way of looking at a food
policy issue. The topics are regional or global in scope and feature high-quality research results as well as
expert opinions that will enhance the quality of debate.
IFPRI’s 2011 Global Food Policy Report is the first of its kind, and I hope it will contribute to an
enriched research agenda that informs sound food policies to the benefit of the world’s poorest and most
vulnerable people. I welcome your feedback, comments, and suggestions at ifpri@cgiar.org.
SHENGGEN FAN
Director General
9.
10. Acknowledgments
This report was prepared under the overall leadership of Shenggen Fan and a core team comprising
Alexander J. Stein, Zhenya Karelina, Klaus von Grebmer, Rajul Pandya-Lorch, and Gwendolyn Stansbury.
It benefitted greatly from the strategic insights of a committee of advisers, including Robert Bos, Margaret
Catley-Carlson, Marion Guillou, Monty Jones, Agnes M. Kalibata, Michiel A. Keyzer, Justin Y. Lin, Mari E.
Pangestu, Martin Pineiro, Prabhu Pingali, Beatriz da Silveira Pinheiro, Keming Qian, M. S. Swaminathan,
Eric Tollens, Rhoda Tumusiime, Joachim von Braun, Emorn Wasantwisut, and Derek Yach. IFPRI’s
Board of Trustees provided additional guidance and inputs, as did the members of IFPRI’s Senior
Management Team.
Excellent text and data contributions were made by Perrihan Al-Riffai, Kym Anderson, Suresh Babu,
Ousmane Badiane, Nienke Beintema, Samuel Benin, Deborah Brautigam, Clemens Breisinger, Bruce
Campbell, Rahul Chaturvedi, Kevin Chen, Cindy Cox, S. Mahendra Dev, Betina Dimaranan, Paul
Dorosh, Olivier Ecker, Shenggen Fan, Heidi Fritschel, Sara Gustafson, Derek Headey, Jikun Huang, Kabba
Joiner, P. K. Joshi, Suneetha Kadiyala, Zhenya Karelina, Jawoo Koo, David Laborde, Rachel Licker, Tsitsi
Makombe, Sohail J. Malik, Paswel Marenya, Geraldo B. Martha Jr., John McDermott, Ruth Meinzen-Dick,
Siwa Msangi, Gerald Nelson, Alejandro Nin Pratt, Ephraim Nkonya, Tolulope Olofinbiyi, Steven Were
Omamo, Robert Paarlberg, Amanda Palazzo, Rajul Pandya-Lorch, Amber Peterman, Prabhu Pingali,
Beatriz da Silveira Pinheiro, Nilam Prasai, Agnes Quisumbing, Jagdeesh Rao Puppala, Claudia Ringler,
M. S. Swaminathan, Maria Theresa Tenorio, Peter Timmer, Maximo Torero, Klaus von Grebmer, Stanley
Wood, Derek Yach, Sivan Yosef, and Bingxin Yu.
In addition, the following people provided thoughtful statements about what influenced food pol-
icy in 2011: Bekele Geleta, José Graziano da Silva, Marion Guillou, Jeremy Hobbs, Michiel A. Keyzer,
Rachel Kyte, Jiayang Li, Justin Yifu Lin, David Nabarro, Kanayo Nwanze, John Parker, Carlos Perez del
Castillo, Keming Qian, Rajiv Shah, Josette Sheeran, Kathy Spahn, Eric Tollens, Joachim von Braun, and
Emorn Wasantwisut.
Production of this report was led by IFPRI’s Publications Department, including Adrienne Chu, Patricia
Fowlkes, Heidi Fritschel, Corinne Garber, Michael Go, Marcia MacNeil, Lucy McCoy, Andrea Pedolsky,
David Popham, Ashley St. Thomas, Julia Vivalo, and John Whitehead. In addition, valuable research sup-
port was provided by Joanna Brzeska, Zhenya Karelina, Tolulope Olofinbiyi, and Ana Ramirez.
The report benefitted greatly from careful peer review by IFPRI’s Publications Review Committee,
chaired by Gershon Feder, and many anonymous scholars and experts who reviewed the research and
provided insightful comments on the preliminary drafts.
11.
12. Chapter 1
OVERVIEW
Major Food Policy
Developments in 2011
Shenggen Fan, IFPRI
T he year 2011 highlighted ongoing chal-
lenges to global food security, from food price
volatility, extreme weather shocks, and famine
to unrest and conflicts. On the policy front, major devel-
opments at the global and national levels both offered
grounds for encouragement and pointed to areas where
further action is needed.
First, the good news: after many years of neglect, agriculture and food secu-
rity are back on the development and political agendas. Both China and India
continued to expand their spending on food security and agricultural produc-
tion. Some 20 African countries have adopted national agricultural and food
security investment plans in which they will devote 10 percent of their national
budget to agriculture to achieve agricultural growth of 6 percent a year. The
US Agency for International Development (USAID) moved forward with its
Feed the Future Initiative, begun in 2010, and the World Bank Group main-
tained its recent increased annual commitments to agriculture and related
sectors at about US$6 billion. The Consultative Group on International Agri-
cultural Research (CGIAR)—a global partnership for sustainable develop-
ment, of which IFPRI is a part—initiated an array of large, innovative research
programs in 2011. And the Bill Melinda Gates Foundation refreshed its
agriculture strategy with a strong focus on agricultural development in Sub-
Saharan Africa and South Asia.
More broadly, agriculture was increasingly seen as part of a larger con-
text. It is becoming clear that agriculture contributes not just to food produc-
tion, but also to human nutrition and health—conditions that in turn can
affect agricultural productivity and overall economic growth. Agriculture is
13. also an important element in a number of other reserves are extremely low and staple grains are
interlocking systems. It has strong ties to water, exported by just a few countries. However, favorable
land, and energy, which are, like agriculture harvests in major producing regions and a stronger
itself, under increasing pressure. And many of the US dollar induced a fall in dollar-denominated
events of 2011 underlined how food security— prices during the second half of the year.
that is, availability of and access to sufficient, safe, What do rising or volatile food prices mean for
nutritious food to maintain a healthy and active the poor? Higher food prices cut into the budgets
life—is linked to other notions of security. These of poor consumers but could raise the incomes of
include economic security (related to employ- poor producers if they produce more than they
ment, incomes, and gender), sociopolitical security consume. Volatile food prices, however, harm both
(related to inequality, governance, and conflicts), consumers and producers by increasing uncer-
and environmental security (related to natu- tainty and making it difficult for households to
ral resources). budget for food consumption and to plan for pro-
New thinking has been accompanied by new duction. Still, more needs to be learned about the
actors entering the global food system. In 2011, specific impacts of price volatility on the diets of
for the first time, the agriculture ministers of the the poor, particularly women and children. In Ethi-
Group of 20 (G20) countries met and agreed to opia, for example, research on the 2007–08 food
work together to tackle food price volatility and price crisis found that female-headed households
food insecurity. Emerging economies such as were especially vulnerable to food price shocks.1
Brazil, China, and India have gained an increas- Shifts in food prices stimulated new policies and
ing voice in international decisionmaking, moving initiatives during the year. As mentioned, the G20
from being aid recipients to aid donors and trading ministers of agriculture came together to design
partners, with their own global agendas. an action plan to reduce price volatility, regulate
This overview reviews the major food policy commodity markets, and promote long-term agri-
developments of 2011, drawing largely on the cultural productivity. Toward the end of the year,
chapters in this report, which look back at the the countries of the Association of Southeast Asian
year in detail. Nations, plus China, Japan, and South Korea (alto-
gether known as ASEAN+3) established an emer-
gency rice reserve to help ensure long-term food
FOOD PRICE LEVELS AND VOLATILITY
security in the region.
Global food prices rose during the first half of 2011 Some national policies taken in response to
and fell during the second half of the year. The food changes in food prices may have increased the
price index of the Food and Agriculture Orga- strain on the global food system. To raise pro-
nization of the United Nations, which measures ducer incomes, the government of Thailand, the
monthly change in the international prices of a bas- world’s largest exporter of milled rice, established
ket of food commodities, reached a record high in a rice subsidy scheme that threatened to shrink
February but moved steadily downward from June its exports and contribute to higher global rice
to December, ending lower for the year. Still, food prices—a trend observed in the second half of the
price volatility remained high in 2011. year. Several countries, including China, turned to
The factors that pushed up prices during the large grain imports to build up strategic reserves,
2007–08 food price crisis were again at play during raising concerns about tighter grain markets.
the 2010–11 crisis, including high oil prices, bio-
fuel policies that promote the expansion of biofuel
NATURAL AND HUMAN-CAUSED
production, increased weather-related shocks such
SHOCKS
as droughts and floods, and growing demand from
emerging economies. Further, the world remains The world saw some of the most severe natural
vulnerable to food price swings because grain disasters on record in 2011. The 9.0-magnitude
2 Major Food Policy Developments in 2011
14. CLIMATE CHANGE
earthquake and tsunami in Japan; the severe floods
or storms in Brazil, Pakistan, the Philippines, Thai- The record-breaking extreme weather events of
land, and the United States; and the drought in 2011 suggested that climate change will put addi-
the Horn of Africa imposed large economic losses tional pressure on world agriculture in the com-
during the year. According to the International ing decades. The year provided more evidence
Disaster Database, more than 200 natural disas- that greenhouse gas emissions are rising and
ters, affecting nearly 100 million people around that climate change is already affecting agricul-
the world, occurred during the year.2 Munich Re, a tural productivity.
reinsurance company in Germany, estimated that The encouraging progress made at the annual
2011 natural disasters imposed economic losses of climate conventions in 2010 in Cancun and
a record US$380 billion—more than double those in 2011 in Durban helped address the disap-
of 2010 and far above the record losses of 2005.3 pointment created by the failure of the 2009
Poor and hungry people are particularly suscep- Copenhagen negotiations to result in binding
tible to these natural shocks. commitments and gave a greater place to agricul-
In the Horn of Africa, severe drought due to ture in global climate change negotiations. A key
consecutive poor rainy seasons was the worst result was the creation of the Durban Platform for
experienced in 60 years. Extreme drought condi- Enhanced Action. This platform, which includes
tions triggered a widespread crisis in the region all the Kyoto Protocol signatories plus the United
that was especially catastrophic in Somalia. Many States, is a mechanism for forging a treaty by
parts of the Horn, especially the lowland areas, 2015, whose goal is to bring both developed and
saw large crop losses, significant depletion of graz- developing countries together under a legally
ing resources, skyrocketing food prices, and sub- binding agreement by 2020.
stantial livestock and human mortality. The dire Outside of formal negotiations, countries and
situation attracted belated policy and media atten- regions are proceeding with their own efforts to
tion as more than 13 million people, principally adapt to and mitigate climate change, even in the
pastoralists and farmers, were affected and their face of a difficult macroeconomic climate. China,
food and nutrition security was severely under- India, and Kenya, for instance, have all undertaken
mined. Vulnerable groups such as women and significant agricultural adaptation and mitiga-
children experienced acute food insecurity and tion activities. The progress made at the national
undernutrition. The United Nations Children’s and subnational levels should not overshadow the
Fund reported that more than 320,000 children principle of common but different responsibili-
suffered from severe malnutrition at the height of ties, enshrined in the United Nations Framework
the crisis. Convention on Climate Change text. Rather, these
Droughts in the Horn of Africa are not new, national and subnational activities could be the
but the scale of the 2010–11 crisis has been basis of a binding multilateral agreement to pursue
unusual. Although exposure to natural shocks is low-emission development strategies.
inevitable, human vulnerability to these shocks
is not. Reducing vulnerability means improving
BIOFUELS
society’s ability to cope and build resiliency in the
face of future shocks. Given the severity of the Biofuel policy changes in 2011 were dominated
drought in the Horn of Africa and the frequency by the European Union, the United States, and
of humanitarian emergencies in the region, a con- Brazil. In the United States, the Biofuels Market
certed effort is needed to catalyze a transforma- Expansion Act of 2011 came into law, and debate
tion, combining innovation, experimentation, centered on whether the Volumetric Ethanol
and political commitment to enhance resiliency Excise Tax Credit—a tax credit for blending etha-
and mitigate the chronic stresses that also impede nol into gasoline—should be repealed. Research
progress in the region. suggests that this tax credit, combined with the
Overview 3
15. ethanol blending mandate, results in both welfare European Union during 2011. A central question
and efficiency losses.4 In addition, the Round- concerns biofuel production and indirect land use
table for Sustainable Biofuels was launched as a change—that is, whether the growing use of land
mechanism for certifying biofuel producers who for biofuel crops ultimately leads to conversion of
adhere to standards of low environmental impact natural land to cropland, diminishing the extent to
and fair labor practices. This certification could which biofuel production cuts carbon emissions.
facilitate their compliance with European Union As of December 2011, the European Commission
regulations and provide a “green label” that could had not released its report on biofuel impacts, but
earn them a price premium as the market fur- once the research provides more conclusive impact
ther develops. findings and policy options, the region should be
The environmental impacts of biofuel produc- able to move forward with adjusting its Renewable
tion were an important topic of investigation in the Energy Directive.
WORLD ECONOMIC FORUM ON AGRICULTURE
A “New Vision for Agriculture” is presented at the
World Economic Forum in Switzerland, promoting
market-based solutions to accelerate sustainable G20 AGRICULTURE MINISTERS MEET
agricultural growth. The first-ever meeting of the G20 agriculture
January 28
ministers, in Paris, yields a proposal to tackle
food price volatility and strengthen food security.
June 22–23
CHINA NO.1 DOCUMENT
China’s No. 1 Document focuses for the eighth consecutive
year on water conservation and water infrastructure, due to
the previous year’s droughts and floods.
January 29
AFRICA/INDIA FORUM SUMMIT
IFPRI NUTRITION/HEALTH CONFERENCE At the second Africa–India Forum Summit
More than 1,000 people attend the IFPRI-organized in Addis Abba, Ethiopia, “Enhancing
conference, “Leveraging Agriculture for Improving Partnership, Shared Vision,” leaders
Nutrition and Health,” in New Delhi, India. release a framework to reinforce coopera-
February 10–12 tion between African countries and India.
May 24–25
JAN FEB MAR APR M AY JUN
previous highest peak, 224 in 2008
238
FOOD For most of 2011
food prices were
PRICE above the 2008
peak. Only in the
INDEX The Food Price Index measures weighted average international last three months
DEC 2011
JAN 2011
prices of basic food commodities. The prices from 2002–2004 did prices fall
FEBRUARY 2011
PEAKS highest peak in FPI history were set to 100 to serve as baseline for the index.
below the previous
peak of 224.
16. THE FOOD AND AGRICULTURE NEXUS
Brazil, China, and India have also substantially
developed and revised their biofuel policies in In an increasingly interlinked global environment,
ways that could have a large impact on food secu- policymakers have begun to more overtly recog-
rity both within their own borders and outside nize the links between agriculture and nutrition,
of them. health, water, and energy.
Finally, the 2011 disaster at Japan’s Fukushima The agriculture, nutrition, and health nexus
Daiichi nuclear plant revived debate on the poten- came to prominence in early 2011 with an inter-
tial drawbacks of nuclear power, and a number of national conference “Leveraging Agriculture for
countries are reducing their reliance on nuclear Improving Nutrition and Health” in New Delhi,
energy or phasing it out entirely. This debate may organized by IFPRI and its 2020 Vision Initia-
cause countries to shift to bioenergy, leading to fur- tive. This conference inspired and supported a
ther increases in global food prices. range of new initiatives, including the launch
NATIONAL FOOD SECURITY BILL IN INDIA
UN FOCUSES ON NONCOMMUNICABLE DISEASES The Indian government introduces the National
The first-ever United Nations General Assembly on the prevention Food Security Bill in parliament, shifting to a
and control of noncommunicable diseases declares the need for a rights-based approach to food security.
whole-government approach that includes the agricultural sector. FOOD/NUTRITION SECURITY December 22
September 19–20 IN AFRICA
Africa Food and Nutrition Security
UN ON LAND-DEGRADATION BONN 2011 CONFERENCE LOOKS AT
Day takes place for the second time
The United Nations General Assembly calls for building a FOOD SECURITY
and examines “Investing in
land-degradation-neutral world, a target reflecting the green economy The German government hosts the Bonn2011
Intra-Africa Trade for Food and
theme of the Rio+20 UN Conference on Sustainable Development. Conference on water, energy, and food
Nutrition Security.”
September 19–20 security links in preparation for the Rio +20
October 31
RUSSIA LIFTS EXPORT BAN ON GRAIN UN Conference on Sustainable Development.
Russia removes grain export bans put in place the November 16–18
previous year after wildfires destroyed a significant
amount of the annual harvest. ASEAN RICE RESERVE UN: CLIMATE CHANGE
July 1 ASEAN (Association of
AGREEMENT
Southeast Nations) Plus
UN DECLARES SOMALIA FAMINE At the United Nations Climate
Three ministers endorse
The United Nations announces that the Change Conference in Durban,
the establishment of a
drought in the Horn of Africa has led to South Africa, the attendees
rice emergency reserve
outright famine in areas of Somalia. decide to adopt a universal
scheme.
July 20 legal agreement on climate
October 7
change before 2015.
November 28–December 9
JUL AUG SEP OCT NOV DEC
11
SEPTEMBER 2011 number of people
Over 13.3 million targeted to receive
HOW MANY
people in the Horn
food aid at the
of Africa were
affected by one of million height of the crisis
WERE HUNGRY? the worst droughts
10
in 60 years. time between the first
HORN OF AFRICA
JUN 2011
FEB 2012
alerts about a looming
crisis and the peak of
FOOD CRISIS months the famine
SOURCE: Food and Agriculture Organization of the United Nations
17. of a major research program called “Agricul- for strengthening linkages across sectors and
ture for Improved Nutrition and Health” by achieving win–win outcomes.
the CGIAR. Several development agencies—
USAID, with its Feed the Future Initiative, and
LAND
the United Kingdom Department for Inter-
national Development—also began to design A rising world population, growing demand for
or redesign their programs to better tap the food, fiber, and biofuels, and recent spikes in global
links among agriculture, nutrition, and health. food prices have placed increased pressure on land,
During 2011, 24 countries with high rates of resulting in more land degradation and increas-
undernutrition joined the Scaling Up Nutrition ing land prices, particularly in Sub-Saharan Africa,
initiative, a movement bringing together govern- East Asia, and parts of Latin America.
ments, civil society, the private sector, research Several major land policy developments trans-
institutions, and the United Nations to sup- pired in 2011. The United Nations General Assem-
port countries in their efforts to develop nutri- bly convened a high-level meeting to address
tion- sensitive national plans. More than 100 desertification, land degradation, and drought,
organizations also endorsed the movement. In with government representatives highlighting not
Sub-Saharan Africa, efforts to integrate nutrition only the threat posed by land degradation to social,
and health into agriculture development strate- economic, and environmental sustainability, but
gies were made on the continental, regional, and also the need for future investment in sustainable
country level in the form of workshops, confer- land management. Several initiatives—specifically,
ences, and action plans. These efforts included the FAO’s Global Soil Partnership as well as the
an agreement between the New Partnership for Economics of Land Degradation initiative under-
Africa’s Development and the Global Alliance for taken by Germany, the European Commission,
Improved Nutrition to develop a five-year joint and the United Nations Convention to Combat
program to fully integrate nutrition security into Desertification—were launched as mechanisms
the Comprehensive Africa Agriculture Develop- for strengthening sustainable land management
ment Program. through knowledge building and sharing. New
The links among food, water, and energy evidence presented at these events by IFPRI
also gained attention in late 2011 with the con- researchers shows that policymakers should pay
ference “The Water, Energy, and Food Secu- attention to land degradation not just in dry areas,
rity Nexus” in Bonn, Germany. The Food and but also on many high-quality irrigated lands.
Agriculture Organization of the United Nations More should be done to assure the availability of
(FAO) launched a new addition to its State of the fertilizers in areas where additional fertilizer use is
World report series with a report called The State needed and appropriate to improve soil fertility.
of the World’s Land and Water Resources, examin- One dimension of land management policies
ing the availability of cultivable land, the state of that particularly occupied public discourse in
land degradation, and institutions for managing 2011 was the issue of foreign land acquisitions—
scarce land and water.5 often described as “land grabbing”—especially
Despite progress, more can be done to maxi- in Sub-Saharan Africa. Such acquisitions have
mize the opportunities presented by the links the potential to inject much-needed investment
among agriculture and other sectors. One barrier into agriculture in developing countries, but they
to collaboration between agriculture and other can also harm the food security and livelihoods
development fields is a lack of common metrics of the local poor. Large-scale land deals may also
for measuring the impact of agricultural inter- have negative impacts on gender equity if they
ventions on other development outcomes such as erode women’s customary land rights.6 Reports
health, nutrition, and natural resources. And more on the issue in 2011 by the FAO, the World Bank,
research is needed to identify viable opportunities and the International Fund for Agricultural
6 Major Food Policy Developments in 2011
18. Development all highlighted the need for gov- New “players”—such as the private
ernments to ensure responsible investment in
agriculture and to strengthen land administration sector, emerging economies, and
systems that respect the rights, livelihoods, and
resources of all citizens.7 philanthropic organizations—are
NEW PLAYERS
increasingly reshaping the structure
New “players”—such as the private sector, emerg- and nature of the global food policy
ing economies, and philanthropic organizations—
are increasingly reshaping the structure and nature landscape.
of the global food policy landscape. Not only are
these new players a largely untapped source of the development of policy positions on food price
financial support to food security efforts in devel- volatility and food insecurity that fed directly
oping countries, but they also offer a wealth of into the 2011 deliberations of the G20 agricul-
knowledge and expertise, providing new oppor- ture ministers. Public–private partnerships have
tunities to address the increasing complexity and been launched to promote sustainable agricultural
challenges facing the global food system. growth, reduce hunger, and improve nutrition.
In 2011 these new players became more For instance, PepsiCo has signed several agree-
entrenched in global food policymaking processes. ments with international organizations to sup-
For example, the G20 is quickly claiming a growing port increased agricultural production (especially
role, next to the G8, as a principal forum for man- among smallholders) alongside long-term nutri-
aging global economic problems. The action plan tional and economic security efforts in countries
of the G20 agriculture ministers also emphasized such as China, Ethiopia, and Mexico. Similarly, pri-
the importance of strengthening the engagement vate philanthropic and civil society organizations
of nonstate actors, especially the private sector, in have continued to be major supporters of agricul-
global food security efforts. Emerging economies tural development, nutrition, poverty alleviation,
such as Brazil, China, and India have increased and natural resource management.
their engagement, especially in terms of forging Still, the opportunities presented by these new
South–South cooperation. In 2011, for example, the players have not been fully harnessed. For example,
FAO and China made three-party agreements with the private sector’s presence in many global food
Liberia and Senegal to provide Chinese technical security platforms is essentially limited to multi-
assistance to food security initiatives and projects. national corporations, and there is no real platform
One noteworthy development has been the initia- for engaging smaller companies. And until recently,
tion of cooperation agreements between the Bill the traditional aid donor community—represented
Melinda Gates Foundation and emerging economies by the Organisation for Economic Co-operation
such as Brazil and China in support of agricultural and Development’s Development Assistance Com-
and health innovations in the developing world. mittee—has not involved new players.
Other 2011 initiatives demonstrate the private
sector’s increasing involvement in global food secu-
REGIONAL DEVELOPMENTS
rity efforts. The World Economic Forum released
a “Roadmap for Stakeholders” as part of its New Some regional developments shaped food secu-
Vision for Agriculture Initiative. This initiative—a rity and agriculture, as well as development more
collaboration among the World Economic Forum’s broadly, over the course of 2011.
partner companies—promotes market-based strat- In parts of North Africa and the Middle East,
egies for sustainable agricultural development. In long-standing factors—ranging from youth unem-
parallel, the Forum’s partner CEOs contributed to ployment to growing income disparities and high
Overview 7
19. risk of food insecurity—led to the Arab Spring, protections have negatively affected the agricul-
mainly in Egypt, Libya, and Tunisia, but also in ture sector in developing countries.
Bahrain, Syria, and Yemen. Addressing the chal-
lenges that gave rise to the Arab Spring will require
OUTLOOK FOR 2012 AND
more inclusive development strategies. To improve
OPPORTUNITIES FOR ACTION
household food security, governments in the region
will need to adopt policies that stimulate inclusive Overall, 2011 and the years immediately preced-
growth, such as employment generation for the ing it have revealed serious weaknesses facing the
young and poor, as well as expanded and well- global food system—lack of ability to respond to
targeted safety nets. volatile food prices, extreme weather, and inad-
African countries made significant progress in equate response to food emergencies were among
implementing the Comprehensive Africa Agricul- the most visible. But chronic, long-term problems
ture Development Programme (CAADP) in 2011. such as food and nutrition insecurity also point
This program is the African Union’s continent- to areas where the food system can do better. We
wide framework to boost agricultural productivity also face uncertainties. It is not yet clear whether
and food security. Six countries signed compacts the global economic slowdown will worsen or
committing them to achieving an agricultural sec- be reversed. Addressing all of these issues in a
tor growth rate of 6 percent a year and to raising resource-scarce world will require keeping agri-
funding for the sector to at least 10 percent of the culture and food security issues high on the global
national budget—bringing the total number of agenda in 2012 and beyond.
signatory countries to 29. About 20 of these coun- Without preventive action, several hot spots
tries have developed national investment plans, could erupt in food crisis in 2012. Early warn-
and 6 have received funding totaling US$270 bil- ing systems are once again pointing to the risks
lion from the Global Agriculture and Food Secu- posed by drought in Africa—this time in the Sahel
rity Program. region, including Burkina Faso, Mali, Niger, and
In India, Parliament introduced the National Senegal. The experience in the Horn of Africa
Food Security Bill, which would provide rice, was a tragic reminder of the need to move quickly
wheat, and coarse grains at low prices to more and aggressively to head off humanitarian crises.
than half of India’s 1.2 billion people, making it Uncertainty also surrounds North Korea, long a
the world’s largest antihunger program. China recipient of food aid, which is undergoing a leader-
announced plans to boost agricultural productiv- ship transition.
ity through increased public investments in water Participants in the major international events
conservation and irrigation. Its water conservation of 2012 need to keep the spotlight on food policy
investments will total about US$630 billion over issues. The G8 summit in the United States in May
the next 10 years. and the G20 Summit in Los Cabos, Mexico, in June
In Central America and the Caribbean, high could reinforce those groups’ earlier emphasis on
and volatile prices and natural disasters raised global food security and ensure that previous finan-
concerns about “a hungrier” region. In October cial commitments are honored. It is important that
2011, the ministers of agriculture of the Americas discussions and decisions at the Rio+20 conference
approved a declaration emphasizing the impor- on the green economy and sustainable develop-
tance of increasing investment in agriculture to ment not neglect the poor, who need better access
reduce hunger and poverty and help improve social to food, jobs, and natural resources, as well as a
stability in the hemisphere. secure social protection system.
In Europe and the United States, contin- More broadly, food policy decisionmak-
ued policy support to biofuel production, farm ers will face a number of challenges in 2012 and
subsidies, a hostile attitude toward agricultural beyond. The long-term problems of chronic food
biotechnology (mainly in Europe), and trade and nutrition insecurity persist, although they are
8 Major Food Policy Developments in 2011
20. Looking Back
Looking Forward
ENCOURAGING EVENTS IN 2011 NOT WHAT WE HOPED FOR IN 2011 WHAT TO WATCH FOR IN 2012
Agriculture, nutrition, and health climbed High and extremely volatile food prices How are governments responding to
up on the national and global agendas, in the first half of the year threatened the financial crises and how does this affect
and the nexus of agriculture, food, land, food security of millions of people (see their development assistance, especially
water, and energy has received more Chapter 2). in the fields of agriculture and nutri-
attention (see Chapter 6). tion security?
Biofuel policies in the United States
The world’s major political leaders made and the European Union have not been How much progress is being made on
food policy a high priority, with the G20 changed to take into account their impact the various initiatives taken in 2011, like
agreement on an Action Plan on Food on land-use change and food price volatil- the G20 Action Plan or the G8’s repeated
Price Volatility and Agriculture. ity (see Chapter 5). commitment to improve food security?
At the World Economic Forum, the The Doha Round of trade negotiations What impact are noncommercial transac-
world’s business and society leaders gave was still not finalized, so countries con- tions in futures markets and the increas-
agriculture a boost when they initiated tinued to maintain domestic policies that ing trading volume of index funds having
their New Vision for Agriculture. undermine the trading prospects of devel- on high and volatile prices of agricultural
oping countries and the sustainability of commodities? (See Chapter 2.)
Encouraging progress was made at the
the global food system.
climate change conference in Durban, To what extent is agriculture being inte-
acknowledging the role agriculture can Setting a clear international standard or grated in environmental and sustainability
play in the mitigation of and adaptation to “code of conduct” for large-scale for- discussions, including EarthSummit 2012
climate change (see Chapter 4). eign investment in land has received too or the ongoing climate change debate?
little attention.
China’s focus on agricultural policy bore What are the new leaders of the World
fruit as total grain production exceeded African countries are not meeting their Bank, the Food and Agriculture Organiza-
570 million tons, a new record (see Chap- target of allocating at least 10 percent tion of the United Nations, and the World
ter 9). of national budgetary resources Food Programme doing to promote nutri-
to agriculture. tion security and agriculture?
India’s Parliament introduced a National
Food Security Bill to provide affordable The international community responded Are the lessons learned during the crisis
grains to more than half of its 1.2 billion slowly and too late to the disaster that in the Horn of Africa being applied to
people (see Chapter 9). was unfolding in the Horn of Africa (see increase effectiveness and impact when
Chapter 3). addressing the emerging crises in the
New initiatives like Feed the Future, the
Sahel and North Korea?
Global Agriculture and Food Security Hunger still persists globally: nearly one
Program, and South-South cooperations billion people go hungry every day. The How is the balance of power shifting in
boosted agriculture investments. 2011 Global Hunger Index indicates that agricultural research, technology, produc-
more than two dozen countries have tion, and trade, with emerging economies
Promoting mother and child nutrition
“alarming” or “extremely alarming” hun- pushing the agricultural agenda? (See
gained momentum as it became widely
ger levels. Chapter 8.)
accepted that the nutrition in the 1,000
days between conception and a child’s Which countries are making the most
second birthday are of crucial importance progress toward achieving the first Millen-
for the child’s future. nium Development Goal, and why?
Overview 9
21. sometimes overshadowed by more dramatic events policies are where global forces translate into on-
and acute crises. We will soon reach the 2015 tar- the-ground impact, so good governance and effec-
get date of the Millennium Development Goals, tive leadership and implementation can make a big
almost certainly without having met the goal of difference. Some countries would benefit greatly
halving hunger globally. South Asia and Sub- from a stronger emphasis on building the capac-
Saharan Africa, in particular, still show alarm- ity—that is, the skills and knowledge—of policy-
ing levels of food and nutrition insecurity, despite makers and program implementers at all levels.
the progress achieved in recent years. In addition, This outlook points to some high-priority areas
more work will be needed to reach an effective for action in 2012. First, the G20 should take fur-
international agreement on climate change. ther steps to rein in food price volatility by, for
We must find new ways to exploit the links example, doing more to reduce the competition
between agriculture and other sectors, including between biofuel and food production and to dis-
health, nutrition, water, and energy. Paying attention courage trade restrictions that exacerbate price
to gender equity will help make investments and swings. Second, the international community
interventions in these areas more effective. Because should consolidate global and regional agricul-
agriculture is at the nexus of all of these areas, we tural growth strategies and create or strengthen
need to leverage it for broad development outcomes. the institutions and capacities needed to make
At the same time, it will be important to set up a these strategies work. In particular, this year’s G8
global system to measure, track, and monitor the summit should work to ensure that the industrial
impacts among agriculture, food and nutrition secu- countries meet their financial commitment in
rity, energy, and natural resources. In addition, to support of a country-led development process for
allocate resources more effectively, we should begin achieving food security in developing countries.
to base the prices of natural resources and food on Third, participants in the Rio+20 meeting should
their full value to society, including their social and integrate economic, social, and environmental
environmental costs, such as impacts on climate sustainability efforts and commit to concrete
change and health. All of these actions require skills action to meet the long-term challenges of devel-
and knowledge at the national and local level, so opment, including poor nutrition, degraded soils,
capacity building can help improve outcomes. and scarce water. Finally, a broad intersectoral
These events and challenges will play out in dif- coalition should work together to address issues
ferent ways in each country. National and local related to nutrition, food, and health. ■
10 Major Food Policy Developments in 2011
22. What Influenced Food
Policy in 2011?
Most spectacular in 2011 was the turn of events on world When food prices rose in 2008, hasty responses like ban-
wheat markets from price spike to near collapse: In the ning food exports helped drive 100 million people into
spring the media expected a second world food crisis, pos- poverty—the first increase in decades. When food prices
sibly worse than 2007–08. Until July, and particularly head rose again in 2011, the world avoided poor policy responses
of the meeting of G20 agricultural ministers, speculators and invested instead in long-term food security. During
and index funds were being accused more than ever of the world’s worst drought in 60 years, this approach was
causing hunger. But then wheat prices dropped, and atten- validated by Kenya and Ethiopia’s ability to avoid famine,
tion to speculation waned, hopefully making room for thanks in part to President Obama’s Feed the Future initia-
policy attention to larger, more long-term issues, such as tive and its emphasis on building resilience through agri-
rural finance. cultural development.
—Michiel A. Keyzer, Director, Centre for World Food —Rajiv Shah, Administrator,
Studies, VU University, Amsterdam United States Agency for International Development,
Washington, DC
Amid drought in the Horn of Africa, floods in South East
Asia, and rain shortfalls in the Sahel, 2011 has clearly In 2011 two events were important: one was the eighth
shown the devastating impact of climate-related shocks on consecutive year of bumper harvest of Chinese grains at
food security. These crises have focused policy attention on a record of 571 million tons, which surely contributes to a
the urgent need to build the resilience of smallholder agri- more stable world grain market; and the other was the G20
culture and poor rural people’s livelihoods. Going forward, Agriculture Ministers Summit in Paris. A new era of inter-
and in light of the UN Climate Change Conference in Dur- national cooperation on global food security is approaching
ban, resilience is likely to remain a critical component of and emerging countries such as Brazil, China, India, and
food security policies, initiatives, and development efforts Indonesia will play increasingly important roles.
at all levels. —Jiayang Li, President, Chinese Academy of Agricultural
Sciences, Beijing
—Kanayo F. Nwanze, President, International Fund for
Agricultural Development, Rome
The developing world was again hit by food price and sup-
The Arab Spring posed the biggest challenge to food policy ply volatility in 2011. In contrast to 2008, the demand for
in 2011—and showed why it matters. Arab countries are effective actions to advance food and nutritional security
squeezed on all sides by high imported food prices, spiral- was front and center. The Committee on World Food Secu-
ing costs of food subsidies, and the dual burdens of mal- rity explicitly stated that agricultural policies and pub-
nutrition and obesity, which will rise with population lic investment should prioritize nutrition and sustainable
growth. The region is also the most vulnerable to global small-scale food production and increase the resilience of
warming, water scarcity, and export bans. Without good local and traditional food systems and biodiversity, a goal
policy and research, feeding the Arab world will grow ever we are fully committed to implementing.
more challenging. —Kathy Spahn, President and Chief Executive Officer,
Helen Keller International, New York
—John Parker, Globalization Editor,
Economist, London
WHAT INFLUENCED FOOD POLICY IN 2011? 11
23. The Democratic Republic of the Congo, which contains stories of 2011, and has real potential to influence national
75 percent of the world’s second largest rainforest, wants to food policy.
be a leader in reducing emissions from forests. Financing —Rachel Kyte, Vice President of Sustainable
is expected to run in the billions of dollars, which demon- Development, World Bank, Washington, DC
strates the government’s increased commitment to agri-
culture. Speculation in agricultural commodities was also The G20 process, with the creation of the Agricultural
high on the agenda in 2011. There is little evidence that Market Information System and general recognition of the
speculators systematically drive food prices, but they do importance of better information significantly influenced
affect price volatility. However, limiting speculative trading food policy in 2011. So did the growing acceptance of the
might do more harm than good. The G20 decided to create UN Food and Agriculture Organization’s findings (in the
more transparency and asked the UN’s Food and Agricul- 2011 State of Food and Agriculture report) that promot-
ture Organization to monitor trading more closely. ing gender equality and equity would bring the number of
—Eric Tollens, Professor Emeritus, Katholieke hungry down by 150 million. Also FAO’s launch of a new
Universiteit, Leuven, Belgium agricultural paradigm, “Save and Grow,” which is designed
to increase global food production sustainably.
For the first time the G20 placed a high priority on agricul- —José Graziano da Silva, Director General, Food and
ture. Price volatility and food security were priorities of the Agriculture Organization of the United Nations, Rome
French presidency. Interest in these issues continues into
2012 under the Mexican presidency and is likely to gener- The increasing momentum of the Scaling Up Nutrition
ate significant investments in agriculture, thus addressing movement was evident in 2011. The movement supported
declining productivity. country-led efforts to improve nutrition through coopera-
—Justin Yifu Lin, Senior Vice President and Chief tive partners working across sectors toward a common
Economist, World Bank, Washington, DC goal. Scaling Up Nutrition promotes both direct nutri-
tion interventions and nutrition-sensitive strategies such
Persistent high food prices, among other things, triggered as improving agricultural practices to increase availabil-
the formation of land markets, leading to excessive com- ity of nutrient-rich crops. The 2011 international confer-
mercial pressure on land in a context of ill-defined property ence “Leveraging Agriculture for Improving Nutrition
rights. A new landscape of energy policy emerged—shale and Health,” coordinated by the 2020 Vision Initiative of
gas, bioenergy, and partial exits from atomic energy in IFPRI, sparked the interests of global counterparts and
Germany and Japan. It comes with indirect linkages to served as a timely complement to the Scaling Up Nutrition
agriculture (in the form of opportunity costs) and raises collective effort.
challenges to address climate change. Food policy was also —Emorn Wasantwisut, Senior Advisor, Institute of
significantly advanced by the G20 debate and proposals Nutrition, Mahidol University, Salaya, Thailand
to increase agriculture aid, commodity trading improve-
ments, and the related US and European follow-up that will I am pleased with last year’s extraordinary commitment
accommodate more transparency and less speculation. by world leaders to improve human nutrition, which has
—Joachim von Braun, Director, Department for Economic stimulated the emergence of a country-led movement to
and Technological Change, Center for Development “Scale Up Nutrition.” I am particularly impressed with
Research, Bonn, Germany the way this has engaged a broad range of stakeholders
and is encouraging nutrition-sensitive agricultural, indus-
Climate-smart agriculture increases productivity, strength- trial, health, education, employment, social welfare, and
ens farmers’ resilience, and reduces agriculture’s con- economic policies. I welcome the focus on improving the
tribution to climate change by reducing greenhouse gas coverage of specific actions to improve nutrition from
emissions and increasing carbon storage on farmland. conception to a child’s second birthday and on politi-
Growing global recognition of climate-smart agricul- cal accountability for equitable improvement in nutri-
ture and its potential to offer triple wins for food security, tion within the context of policies for food, health, and
adaptation and mitigation was one of the major success social security.
—David Nabarro, Special Representative of the United
Nations Secretary General on Food Security
and Nutrition, New York
12 WHAT INFLUENCED FOOD POLICY IN 2011?
24. For the eighth consecutive year, China’s total grain pro- In Canada, the most important food policy event was influ-
duction increased, reaching 571 million tons last year enced by ideology rather than market or resource policy
and exceeding 550 metric tons for the first time in half shifts: the government’s decision to abolish the Canadian
a century. This helped China fight domestic consumer- Wheat Board which for decades has sold all Western Cana-
price inflation and stabilize world food prices. Also, a dian wheat. This will open up new market opportunities for
study group headed by Yuan Longping, China’s father of the international wheat majors. On water issues, there were
hybrid rice, announced that the yield of hybrid rice per Mu interesting indications that the Indian national government
exceeds 900 kilogram in one of its trial sites. This would is looking for the political and financial space to assume a
contribute greatly to Chinese and world food security. larger role, for example, by including major irrigation canal
—Keming Qian, Director General, Department of investments in its next five-year plan.
Development and Planning, Ministry of —Margaret Catley-Carlson, Chair, Crop Diversity Trust,
Agriculture, Beijing Rome, and Patron, Global Water Partnership, Stockholm
In 2011 Oxfam launched its most ambitious campaign: In our 2011 World Disasters Report, the IFRC addressed one
GROW. Food prices, flattening yields, climate change, of the most persistent critical issues facing our word today:
unfair trade, failing markets, inequality between men and hunger. As an Ethiopian, I saw first-hand my country’s ter-
women and land grabs are all connected and contributing rible famine and I know what it means for people to starve.
to a global food system that is dominated by a few powerful Globally, an estimated 925 million people do not have
governments and companies, while failing the majority of enough to eat, and as the population grows between now and
people. GROW will push policy and practice changes from 2050, global food supplies will come under even greater pres-
the global to local levels to grow more food more fairly sure. Governments must acknowledge the right to food and
and sustainably. implement comprehensive, community-centered hunger pre-
—Jeremy Hobbs, Executive Director, Oxfam vention programs now and increase equitable and sustain-
International, Oxford, England able investments in food security.
—Bekele Geleta, Secretary General, International
The destabilizing effects and uncertainties created by the Federation of Red Cross and Red Crescent
recent price hikes of major staple foods and the food crises Societies, Geneva
and famine in the Horn of Africa, have raised food security
concerns to a higher political level, receiving more atten- The G20 focused on food security and price volatility and
tion and priority consideration than in the past in the agen- led to international research initiatives to secure an ade-
das of decisionmakers in governments. This is an important quate level of production. The Wheat Initiative was decided
step forward, since food security is a highly political issue to promote highly productive wheat systems adapted to
that requires political solutions, rather than a humanitar- climate change. The GEO-GLAM project aims to moni-
ian issue that needs technical solutions as it was often seen tor cultivated areas in order to predict harvests, as better
in the past. anticipation prevents the formation of “bubbles” in agricul-
—Carlos Pérez del Castillo, Chair, CGIAR Consortium tural markets. In 2011, G20 decisions represented a major
Board, Montpellier, France step forward in coordinating efforts to improve World
Food Security.
The importance of an integrated approach to food security —Marion Guillou, Chief Executive Officer,
that IFPRI has helped prioritize is vital in today’s world. French National Institute for Agricultural
The year 2011 and the famine in the Horn of Africa rein- Research, Paris
forced the role of social safety net programs in providing a
broad package of support for the most vulnerable—from
specialized nutrition products to protect the minds and
bodies of young children, to investments in sustainable
land management to help communities’ build resiliency
to drought.
—Josette Sheeran, Executive Director, World Food
Programme, Rome
WHAT INFLUENCED FOOD POLICY IN 2011? 13
25.
26. Chapter 2
FOOD PRICES
Riding the Rollercoaster
Maximo Torero, IFPRI
T he world faces a new food economy
that likely involves both higher and more
volatile food prices, and evidence of both
phenomena was on view in 2011. After the food price
crisis of 2007–08, food prices started rising again in
June 2010, with international prices of maize and wheat
roughly doubling by May 2011. The peak came in Feb-
ruary 2011, in a spike that was even more pronounced
than that of 2008, according to the food price index of
the Food and Agriculture Organization of the United
Nations. When prices of specific commodities are
adjusted for inflation, though, the 2011 price spike did
not reach the levels of 2008 (Figure 1).
Although the food price spikes of 2008 and 2011 did not reach the heights of
the 1970s, price volatility—the amplitude of price movements over a particular
period of time—has been at its highest level in the past 50 years. This volatility
has affected wheat and maize prices in particular. For hard wheat, for exam-
ple, there were an average of 27 days of excessive price volatility a year between
January 2001 and December 2006 (according to a measure of price volatility
recently developed at IFPRI1). From January 2007 to December 2011, the average
number of days of excessive volatility more than doubled to 76 a year (Figure 2).2
High and volatile food prices are two different phenomena with distinct
implications for consumers and producers. High food prices may harm poorer
27. FIGURE 1 Inflation-adjusted prices of agricultural commodities and oil, 1990–2011
450 100
90
Weekly crude oil prices (US$ per barrel)
400 Maize
Weekly agricultural commodity
Hard wheat 80
350
prices (US$ per metric ton)
Rice
70
300 Soybeans
Crude oil 60
250
50
200
40
150
30
100
20
50 10
0 0
2011
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Food and Agriculture Organization of the United Nations, FAOSTAT database, http://faostat.fao.org/; International Grains Council, World
Grain Statistics 2009 (London, 2009); US Energy Information Administration, World Crude Oil Prices (online data) (Washington, DC, 2011), www.
eia.gov. Note: Prices are adjusted for inflation using a consumer price index base year of 1982–84 (that is, 1982–84 = 100). Maize is US No. 2 Yel-
low, wheat is US No. 2 Hard Red Winter, rice is White Thai A1 Super, soybeans are US No. 1 Yellow, and crude oil is the spot price for West Texas
Intermediate at Cushing, Oklahoma.
consumers because they need to spend more and pesticides? Should they pay for high-quality
money on their food purchases and therefore may seeds? Without a good idea of how much they will
have to cut back on the quantity or the quality of earn from their products, farmers may become
the food they buy or economize on other needed more pessimistic in their long-term planning and
goods and services. For food producers, higher dampen their investments in areas that could
food prices could raise their incomes—but only improve their productivity. (The positive rela-
if they are net sellers of food, if increased global tionship between price volatility and producers’
prices feed through to their local markets, and if the expected losses can be modeled in a simple profit
price developments on global markets do not also maximization model assuming producers are price
increase their production costs. For many produc- takers. Still, it is important to mention that there
ers, particularly smallholders, some of these condi- is no uniform empirical evidence of the behavioral
tions were not met in the food price crisis of 2011. response of producers to volatility.) By reducing
Apart from these effects of high food prices, supply, such a response could lead to higher prices,
price volatility also has significant effects on food which in turn would hurt consumers.
producers and consumers. Greater price volatility It is important to remember that in rural areas
can lead to greater potential losses for producers the line between food consumers and producers is
because it implies price changes that are larger and blurry. Many households both consume and pro-
faster than what producers can adjust to. Uncer- duce agricultural commodities. Therefore, if prices
tainty about prices makes it more difficult for farm- become more volatile and these households reduce
ers to make sound decisions about how and what their spending on seeds, fertilizer, and other inputs,
to produce. For example, which crops should they this may affect the amount of food available for
produce? Should they invest in expensive fertilizers their own consumption. And even if the households
16 Riding the Rollercoaster